For years, investors looked at active ETFs and saw an intriguing pitch but insufficient data to jump on board. The potential of active investing in the ETF wrapper has long stood out, combining flexibility, seasoned management, and tax efficiency. However, active ETFs are making that big leap forward, with appealing performance and momentum amid a myriad of launches. One particular active international ETF, despite launching just over one year ago, may be exemplifying that sea change.
See more: This Active ETF Is Beating SPY Over Multiple Time Frames
That strategy, the T. Rowe Price International Equity ETF (TOUS ), has seen positive momentum on its technical chart. Per YCharts, the fund’s price is sitting above both its 50-day Simple Moving Average (SMA) and its 200-day SMA YTD. What’s more, the fund has returned 13.2% since inception on an average annual return basis per T. Rowe Price data. That has outperformed its ETF Database Category average over the last one-year period, with that average returning 4.7% in that time.
So, how has the active international ETF done that? Since launch, the strategy has gathered nearly $90 million in AUM by applying an active, research-backed view to international equities. TOUS charges only 50 basis points (bps) to take that approach, which is very competitive in the international category. The active international ETF holds around 150 firms with quality business models, high earnings potential, and other appealing metrics.
The managers behind TOUS apply a fundamental, bottom-up approach that also considers global and local market inputs to craft that overall allocation. TOUS looks primarily for stocks from developed, non-U.S. countries.
That active international ETF approach could provide a solid option for diversifying away from the U.S. right now. While rate cuts do appeal as a potential boost to the stock market, many investors are heavily exposed to expensive tech. Overall, an active international ETF could present an appealing way for investors to get an active ETF into their portfolio.
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